About Me

Thursday, March 05, 2009

Rate compression continues...

The ECB finally acts. Recall that only 2 months ago they somehow did not see the signs.

FRANKFURT (AP) -- The European Central Bank on Thursday cut its main interest rate by a half percentage point to 1.5 percent and hinted that further rate cuts were possible -- as well as a boost in the money supply to help the ailing euro-zone economy.

The rate cut by the Frankfurt-based bank followed a similar half-point reduction by the Bank of England, which took its benchmark rate to 0.5 percent.

Both banks are now at historic record lows and looking beyond interest rates for other ways to stimulate growth amid the world economic slowdown.

ECB President Jean-Claude Trichet said there was a "consensus" on the bank's governing council over the decision to cut and added that the bank could go farther, though he did not provide a clear sign another rate cut would be enacted next month.